Travelers’ profits soar due to investment gains and strong underwriting performance

Travelers Companies reported a 13% increase in first-quarter profit, driven by higher investment income and strong underwriting despite a rise in catastrophe losses. The insurance giant’s success can be attributed to the firming hopes of a soft landing in the economy and wage growth in a tight labor market.

Individuals and businesses are increasing spending on insurance policies, allowing insurers like Travelers to attract and retain clients even with higher prices. Renewal premiums saw a significant increase, with the business insurance unit experiencing a 10.6% rise from the previous year. The growth in personal insurance was also driven by higher prices.

Underwriting gains soared by 57% to $577 million, while net investment income rose by about 28% to $846 million. Catastrophe losses, however, increased to $712 million due to severe wind and hail storms in the central and eastern regions of the United States.

Despite these challenges, Travelers’ core income rose to $1.1 billion for the quarter, with an underlying combined ratio of 87.7%. This improvement indicates that the insurer earned more in premiums than it paid out in claims.

Travelers’ shares have seen a 17% increase this year, outperforming the S&P 500 Property & Casualty Insurance Index. The company’s strong performance in the first quarter reflects its resilience in the face of challenges and its ability to capitalize on opportunities in the insurance market.